Legislature(2013 - 2014)
04/18/2014 09:48 AM House FIN
| Audio | Topic |
|---|---|
| Start | |
| SB195 || SB195 | |
| SJR23 | |
| SB64 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 18, 2014
9:48 a.m.
9:48:11 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 9:48 a.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Lindsey Holmes
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Laura Pierre, Staff, Senator Anna Fairclough; Diane
Barrans, Executive Director, Alaska Commission on
Postsecondary Education, Department of Education and Early
Development; Senator Anna Fairclough, Sponsor; Jordan
Shilling, Staff, Senator John Coghill; Ron Taylor, Deputy
Commissioner, Department of Corrections; Representative Bob
Herron; Joe Balash, Commissioner, Department of Natural
Resources.
PRESENT VIA TELECONFERENCE
Tiffany Thomas, Driver Licensing Manager, Department of
Motor Vehicles, Department of Administration.
SUMMARY
CSSB 64(FIN)
OMNIBUS CRIME/CORRECTIONS/RECIDIVISM BILL
CSSB 64(FIN) was HEARD and HELD in committee for
further consideration.
CSSB 138(FIN)am
GAS PIPELINE; AGDC; OIL & GAS PROD. TAX
CSSB 138(FIN)am was HEARD and HELD in committee
for further consideration.
CSSB 195(FIN)
POSTSECONDARY EDUCATION LOANS/GRANTS
HCS CSSB 195(FIN) was REPORTED out of committee
with a "do pass" recommendation and with one
previously published fiscal impact note: FN2
(DEED).
SJR 23 CONST. AM: STUDENT LOAN DEBT
SJR 23 was REPORTED out of committee with a "do
pass" recommendation and with one previously
published fiscal impact note: FN1 (GOV).
CS FOR SENATE BILL NO. 195(FIN)
"An Act relating to the membership and authority of
the Alaska Commission on Postsecondary Education;
relating to the Alaska Student Loan Corporation;
relating to teacher education loans; relating to
interest on and consolidation of postsecondary
education loans; relating to Alaska supplemental
education loans; relating to AlaskAdvantage grants;
relating to the Alaska family education loan program;
relating to postsecondary educational institutions;
and providing for an effective date."
9:49:10 AM
LAURA PIERRE, STAFF, SENATOR ANNA FAIRCLOUGH, offered a
sponsor statement:
Senate Bill 195 makes both substantive and
housekeeping changes to statutes regarding the Alaska
Commission on Postsecondary Education and the Alaska
Student Loan Corporation. These changes include
allowing the commission to set favorable terms for
borrowers, increase the total loan limit a student may
borrow, and define "on-time" status for a student to
reach completion.
With increasing amounts of debt in the state of
Alaska, borrowers need to make the best and most
informed decisions when they borrow for their
education, as well as when they are preparing to enter
repayment. By allowing the corporation to set
favorable terms, Alaska's students will receive their
education for the best deal.
The cost of tuition is going up at postsecondary
institutions around the country; however, state
education loan maximums have not been modified in
almost twenty years. Increased loan limits will allow
students easier access to enough financial aid from
one loan servicer, thereby easing the processes of
both borrowing and repayment.
National trends show students are taking longer to
complete their postsecondary education. In the past,
an undergraduate degree took, on average, four years
to complete. Now it is more common to see students
take longer to complete their degree. By staying in
school longer, students are accruing more debt and
delaying entry into the workforce. Defining "on-time"
status as 15 credits per semester encourages students
to complete their postsecondary education in a timely
manner. This, in turn, will keep their debt lower,
more manageable, and allow them to enter the workforce
sooner.
The changes proposed in Senate Bill 195 will allow the
commission to better assist Alaskans accessing higher
education. It will create incentives for students to
enroll in sufficient credits to expedite completion of
their degree as well as begin their career as part of
Alaska's workforce.
Ms. Pierre noted that the bill interplayed with SJR 23,
both would allow for a lower interest rate for students and
incentivize early and on-time graduation.
DIANE BARRANS, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON
POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT, testified that the legislation would help to
better meet the needs of students in the state.
Co-Chair Stoltze thought that a constitutional amendment
that would be a mechanism to reduce student loan rates was
an attractive provision.
Ms. Barrans relayed that the relatively attractive market
prior to 2008 had never returned. She said that through the
combination of the bill and the resolution, debt could be
issued at a lower rate than could be otherwise achieved.
Co-Chair Stoltze asked about the federal interplay related
to student loan rates.
Ms. Barrans answered that Congress and the U.S. Department
of Education had created barriers between non-federal
lenders and the consumer. She felt that this had been done
under the guise of consumer protection but with respect to
other governmental agencies, such as the state trying to
offer low rates to students, they had created barriers in
terms of schools being able to recommend state programs.
Representative Holmes asked for clarification on interest
rate changes and borrowing amounts.
Ms. Barrans replied that one advantage would be a rate
decrease of between 1 and 1.25 percent of what could be
achieved with a revenue backed bond. She said that the
other advantage would be that rating agencies and the
market looked to the rating status of the state when
examining general obligation debts rather than the
underlying collateral. She said that credit criteria had
been imposed in recent years that made the loans less
accessible to Alaska residents. She believed that while
credit criteria would need to remain in place, it could be
moderated and make the loans more generally available. She
hoped that by increasing the loan limits varied loan limits
would be set according to the student's level of
enrollment.
9:57:05 AM
Representative Gara asked if the bill would allow for the
reduction of the student loan rate by 1.25 percent compared
to other bonds used currently.
Ms. Barrans replied that yes, when comparing a revenue
backed bond with a general obligation backed bond.
Representative Gara asked whether the 1.25 percent was
lower than the current rate.
Ms. Barrans replied in the affirmative.
Representative Gara asked whether students would be
required to have a guarantor. He wondered whether low
income students would be eligible to get the loan.
Ms. Barrans answered that it would depend on the students
credit score. She said that the combination of changes
would not eliminate the need to have a performing loan
portfolio. She furthered that the concept behind the bill
was that general obligation debt would be issued but that
the state would not be expected to repay the debt; the
revenue on the loans would repay the debt. It was expected
that the credit criteria could be reduced from what it
currently was, but it could not be eliminated altogether.
She said that a student would need to have adequate credit
or a credit worthy co-signer.
Representative Gara asked how low income families, with
little or no credit, could qualify for the program.
Ms. Barrans replied that the student would need to look to
federal aid and state and federal grants. She said that
under the legislation the maximum grant amount would be
increased and the hope was that students would be able to
package other aid to meet their needs.
10:00:27 AM
SENATOR ANNA FAIRCLOUGH, SPONSOR, hoped that the committee
would support both the legislation and SJR 23 unanimously.
She said that the bill was one step closer to consolidating
loans and making sure that students could borrow what they
needed a t a particular point in time instead of having to
go to several creditors. She noted that students that had
to go to several creditors had higher interest rates than
the state was charging; 7.3 percent. She asserted that the
bill would expand the state's authority to let students
borrow loans in one place and reduce their debt.
10:03:00 AM
Co-Chair Stoltze mentioned a 1982 constitutional provision
for veteran's housing bonds. He requested an explanation as
to why the state constitution required provisions like SJR
23.
Senator Fairclough testified that SJR 23 proposed to amend
Article 9, section 8 of the Alaska State Constitution.
Currently, state debt can only be borrowed for capital
projects and veteran's homes. She asserted that the state's
forefathers could never have imagined what student debt
would look like in the future. She said that at the time
that the constitution was written debt was a bad thing and
most things were paid for in cash. She stated that students
could not pay for school in cash and needed to borrow
money. She shared that the legislature could help students
borrow money at a lower interest rate by offering the full
faith and credit of the State of Alaska. She explained that
the constitutional amendment would insert very few words
into the constitution that would allow the ability of the
full faith and credit of the state to be used for student
loans and the advancement of postsecondary education. She
believed that if the amendment passed then the
postsecondary education student loan corporation would have
to advance a plant to the legislature asking whether debt
should be taken on, but this time when going to the bond
market the interest rate would be a full percentage point
lower for students. She said that as the student loans
would all be repaid. She emphasized that the language was
permissive and would allow the state under the right
circumstances to use a better way to finance student loans
if the state wanted to take on or offer additional student
loans.
Co-Chair Stoltze appreciated the need to amend the
constitution by anybody but the court system.
10:07:28 AM
Representative Gara offered his support for the
legislation.
Co-Chair Stoltze CLOSED public testimony. He MOVED to ADOPT
Amendment 1:
Page 13, line 6:
Delete "8,000"
Insert "10,000"
Representative Wilson OBJECTED for discussion.
Co-Chair Stoltze spoke to the amendment.
Senator Fairclough had no problem with the addition of the
amendment. She noted that the bill had yet to be amended
and a concurrence vote would be required.
Co-Chair Stoltze appreciated the notation.
Vice-Chair Neuman offered support for the amendment.
Representative Guttenberg noted that the $2,000 was more
significant for students pursuing vocational education.
Representative Holmes supported the amendment but warned
that comparing one student category with another could be
unfair.
Representative Thompson requested confirmation that the
amendment would change the amount given to an eligible
student attending a career education program to $10,000.
Co-Chair Stoltze thought that the amendment could be made
clearer.
10:12:31 AM
Ms. Barrans interjected that currently career education
students could borrow more than one certificate, the cap
that applied to them was the undergraduate cap.
Co-Chair Stoltze wondered if the amendment would cause any
kind of drafting deficiency.
Ms. Barrans replied in the negative. She said that the
vocational loans covered a broader array of certificates;
historically, the limit had been lower because the
vocational programs had higher default rates. She said that
differentiation between high value and those that produced
a lower return on investment could be researched during the
interim.
Representative Edgmon expressed support for the amendment.
Representative Gara asked whether the amendment would
hamper the department's ability to make loans to all
classes of students.
Ms. Barrans answered no.
Representative Thompson understood that under the amendment
a student could borrow up to $56,000 for a career education
loan.
Ms. Barrans replied that the student would have to have
borrowed to gain a series of credentials; under the
amendment they could borrow up to $10,000 for each separate
program of study, up to $56,000.
Representative Thompson understood that the $10,000 loan
would be for one program. Ms. Barrans replied in the
affirmative.
Co-Chair Stoltze expounded on the history of abuses of the
system in the vocational education field.
10:19:36 AM
Representative Wilson WITHDREW her OBJECTION to the
adoption of Amendment 1. There being NO further OBJECTION,
Amendment 1 was ADOPTED.
10:22:14 AM
Co-Chair Stoltze OPENED public testimony.
Co-Chair Stoltze CLOSED public testimony.
10:23:14 AM
Co-Chair Stoltze queried the fiscal note for SB 195.
Representative Costello discussed the one previously
published fiscal impact note from the Department of
Education and Early Development.
Vice-Chair Neuman MOVED to REPORT HCS CSSB 195(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS CSSB 195(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one previously published
fiscal impact note: FN2 (DEED).
SENATE JOINT RESOLUTION NO. 23
Proposing an amendment to the Constitution of the
State of Alaska relating to contracting state debt for
postsecondary student loans.
10:26:15 AM
Representative Costello discussed the previously published
fiscal note from the Office of the Governor.
Vice-Chair Neuman MOVED to REPORT SJR 23 out of committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
SJR 23 was REPORTED out of committee with a "do pass"
recommendation and with one previously published fiscal
impact note: FN1 (GOV).
10:27:42 AM
AT EASE
10:48:42 AM
RECONVENED
CS FOR SENATE BILL NO. 64(FIN)
"An Act relating to theft and property offenses;
relating to the definition of 'prior convictions' for
certain theft offenses; establishing the Alaska
Criminal Justice Commission and providing an
expiration date; relating to the crime of custodial
interference; relating to the duties of the Alaska
Judicial Council; relating to jail-time credit for
offenders in court-ordered treatment programs;
relating to conditions of release, probation, and
parole; relating to duties of the commissioner of
corrections and board of parole; establishing a fund
for reducing recidivism in the Department of Health
and Social Services; requiring the commissioner of
health and social services to establish programs for
persons on conditions of release or probation that
require testing for controlled substances and
alcoholic beverages; requiring the board of parole to
establish programs for persons on parole that require
testing for controlled substances and alcoholic
beverages; relating to the duties of the Department of
Health and Social Services; and providing for an
effective date."
10:48:59 AM
Co-Chair Stoltze discussed that the committee would hear a
presentation on the bill.
JORDAN SHILLING, STAFF, SENATOR JOHN COGHILL, stated that
SB 64 had had 21 hearings since its introduction, the
summary of changes explaining the bills evolution could be
found in member packets (copy on file). He stated that the
bill had been created with the help of many experts in the
Department of Law, Corrections, the Court System, and the
Public Defender Agency. He introduced the PowerPoint
presentation: "Senate Bill 64 Omnibus
Crime/Corrections/Recidivism Bill" (copy on file).
Mr. Shilling spoke to Slide 7, "Bill Components":
· 24/7 Sobriety
· Alaska Criminal Justice Commission
· Probation Reform (P.A.C.E.)
· More Risk-Needs Assessments
· Recidivism Reduction Fund
· Limited Licenses
· Stricter penalties for attempted abduction
· Adjusting the Felony Theft Threshold
· Incentivizing Residential Treatment
· PTSD Mitigating Factor
· Confidentiality of Criminal Records
Vice-Chair Neuman expressed concern about the Recidivism
Reduction Fund. He believed that the Department of
Corrections (DOC) had not used the funding it had received
in FY14 through the Department of Health and Social
Services (DHSS) because DOC had not had the ability to
catch the shorter term people in need. He asked how it was
envisioned that the fund would work; where would the money
come from and how much money was expected.
Mr. Shilling understood that Vice-Chair Neuman's office was
in communication with DOC concerning movement of the fund.
He deferred the question to the department.
10:53:46 AM
RON TAYLOR, DEPUTY COMMISSIONER, DEPARTMENT OF CORRECTIONS,
stated that $1 million had lapsed in terms of programming
funds for substance abuse treatment programs and sex
offender treatment programs.
Co-Chair Stoltze asked if it was due to the inability to
transfer the money to other programs.
Mr. Taylor replied that the funds designated for those
programs was not spent due to a number of factors and had
not been transferred to other programs.
Vice-Chair Neuman queried why the money available for drug
treatment programs was not being used by the department for
those programs.
Mr. Taylor replied that contracts with providers needed to
be vetted; additionally, when the contracts were
established it was on a fee for service basis; if no
services were provided on the contract then the department
did not pay the money. He said that it was discovered
toward the end of the fiscal year the money would lapse
because of the way that the contracts were structured. He
assured that the department was making efforts to ensure
that the money was getting where it needed be in addition
to working to include incentives in contract to ensure that
staffing was appropriate. He said that the sex offender
treatment program in Bethel had been the biggest problem
for the department because there had been no provider in
the area for several years.
Vice-Chair Neuman reminded the committee that there was an
amendment included in the operating budget directing
legislators to work with DOC to reduce recidivisms.
10:56:52 AM
Co-Chair Stoltze asked which of the provisions had
initially been a priority of the sponsor.
Mr. Shilling replied that the evidence based programs were
extremely important, the 24/7 Sobriety Program, the
Probation Reform Program (P.A.C.E.), and the Recidivism
Reduction Fund. He said that the purpose of the fund
differed from the funds previously mentioned; the purpose
of the fund was to provide resources for individuals that
had been incarcerated for a long time and had been recently
released. He stressed that one of the biggest drivers of
the recidivism rate was the way that prisoners were release
without resources to be successful outside prison.
Mr. Shilling shared that the provisions that had been added
to the original legislation were: the PTSD Mitigating
Factor, the Limited License provision, and Sections 2
through 4 concerning custodial interference were added in
Senate Judiciary. He related that all other provisions were
decided to be put into the bill during the interim as
directed by the bill sponsor.
Representative Munoz asked about the Limited License
provision.
Mr. Shilling pointed to Slide 23. He explained that the
third DUI was considered a felony DUI, and often the
offender would lose their license for the rest of their
life. He stated that it was the sponsor's belief that,
while the state had told them that they could not drive
anymore, those individuals were currently on the road and
without any accountability measures. He suggested that a
special license could be granted to those individuals and
referred to Slide 38, which listed details of the provision
found in Section 30:
A court may grant a limited license for felony DUI if:
· The person is participating in a court-ordered
treatment program
· Provides proof of insurance
· Has an ignition interlock installed on their
vehicle
· Enrolled in the ASAP program.
· Participating in 24/7 Sobriety
· Has not been granted a limited license before
Representative Munoz asked for details on the ASAP program.
Mr. Shilling answered that is was the Alcohol Safety Action
Program (ASAP), a drug screening and monitoring program. He
related that anyone who got a DUI in the state was enrolled
for a certain period of time. He added that the Limited
License had been structured in a way that the offender
would be fully accountable and there were no loopholes for
them to be a danger to the public.
Representative Munoz asked about the testing twice per day
related to the 24/7 Sobriety provision.
Mr. Shilling affirmed that that the 24/7 provision required
twice daily breathalyzer tests.
Representative Munoz understood that the alternate license
was an alternative to permanent revocation.
Mr. Shilling replied that it was an option for certain
felony DUI offenders with lifetime revocations that were
eligible for the therapeutic courts.
11:02:54 AM
Representative Munoz asked whether partial custody
interference and removal of a child for the state against
the wishes of the other parent fell under the provisions of
the bill.
Mr. Shilling answered no. He furthered that the Custodial
Interference section was geared towards non-relatives and
dealt only with custodial interference in the 2nd degree.
11:05:33 AM
Representative Guttenberg referred back to Section 30 of
the legislation. He wondered what would happen to
individuals who received the alternative license and then
continued to disregard the law.
Mr. Shilling answered that the same penalties would apply
to them as would for individuals with regular licenses. He
added that one aspect that was intended to change the
behavior was the requirement that they successfully
participate in the therapeutic courts.
Representative Guttenberg wondered what would happen if a
person received another DUI.
Mr. Shilling said that if another DUI was received under
the limited license the person would lose the limited
license and would not be eligible again for the limited
license. //
Representative Guttenberg asked at what point the person
would face jail time.
Mr. Shilling opined that the bill did not address the
question.
Representative Thompson expressed concern about proof of
insurance and thought language should be included that
mandated proof of insurance for the limited licensees.
Mr. Shilling pointed to Page 18, line 30 of the bill that
required an individual to provide proof of insurance.
11:09:08 AM
Representative Wilson had heard about two different 24/7
programs. She wondered which program was included in the
bill.
Mr. Shilling answered that the bill contained the felony
limited license program, the other program was a
misdemeanor limited license program that tied the 24/7
program to the license.
Representative Wilson understood the third DUI would be
considered a felony under the bill.
Mr. Shilling answered in the affirmative; in a 10-year
period.
Representative Wilson asked about the timespan between the
moment for felony conviction and eligibility for a limited
license and what the restrictions would be on the license.
Mr. Shilling deferred the question to the court system.
11:12:14 AM
TIFFANY THOMAS, DRIVER LICENSING MANAGER, DEPARTMENT OF
MOTOR VEHICLES, DEPARTMENT OF ADMINISTRATION (via
teleconference), relayed that there would be two different
mechanisms for a termination of revocation for a felony
offender. The first would be for those offenders that did
not have the opportunity to go through therapeutic court;
according to AS 28.35.030, the person would have a 10 year
minimum period of revocation before they could apply for a
termination. The second path would involve the people that
participated in therapeutic court; upon completion of
therapeutic court and successful participation on a limited
license they would be eligible to apply for a termination
of revocation through the department. She said that the
process could take 1 to 2 months.
Representative Wilson asked how long it would take a person
to get through the therapeutic court system before they
could begin driving again.
11:16:19 AM
Ms. Thomas replied that the court orders treatment program
would take 6 months and all other requirements would need
to be met. She thought it could take over a year before
they could apply for the termination process.
Representative Wilson asked for a definition of a limited
license.
Ms. Thomas replied that the division referred to it as an
unlimited limited because it was not restricted to work.
She said the limitations would be outlined in the bill.
11:17:54 AM
SB 64 was HEARD and HELD in committee for further
consideration.
11:18:27 AM
RECESSED
5:16:34 PM
RECONVENED
Co-Chair Stoltze called the meeting to order. He relayed
that the updated fiscal notes for HCS CSSB 195(FIN) and SJR
23 had not changed. The bills had reported out of committee
earlier in the day.
CS FOR SENATE BILL NO. 138(FIN) am
"An Act relating to the purposes, powers, and duties
of the Alaska Gasline Development Corporation;
relating to an in-state natural gas pipeline, an
Alaska liquefied natural gas project, and associated
funds; requiring state agencies and other entities to
expedite reviews and actions related to natural gas
pipelines and projects; relating to the authorities
and duties of the commissioner of natural resources
relating to a North Slope natural gas project, oil and
gas and gas only leases, and royalty gas and other gas
received by the state including gas received as
payment for the production tax on gas; relating to the
tax on oil and gas production, on oil production, and
on gas production; relating to the duties of the
commissioner of revenue relating to a North Slope
natural gas project and gas received as payment for
tax; relating to confidential information and public
record status of information provided to or in the
custody of the Department of Natural Resources and the
Department of Revenue; relating to apportionment
factors of the Alaska Net Income Tax Act; amending the
definition of gross value at the 'point of production'
for gas for purposes of the oil and gas production
tax; clarifying that the exploration incentive credit,
the oil or gas producer education credit, and the film
production tax credit may not be taken against the gas
production tax paid in gas; relating to the oil or gas
producer education credit; requesting the governor to
establish an interim advisory board to advise the
governor on municipal involvement in a North Slope
natural gas project; relating to the development of a
plan by the Alaska Energy Authority for developing
infrastructure to deliver affordable energy to areas
of the state that will not have direct access to a
North Slope natural gas pipeline and a recommendation
of a funding source for energy infrastructure
development; establishing the Alaska affordable energy
fund; requiring the commissioner of revenue to develop
a plan and suggest legislation for municipalities,
regional corporations, and residents of the state to
acquire ownership interests in a North Slope natural
gas pipeline project; making conforming amendments;
and providing for an effective date."
He relayed his intent to address the fiscal notes for HCS
CSSB 138(FIN) [the bill reported out of committee the
previous night]. He would have the Department of Natural
Resources address the components and costs of each fiscal
note.
JOE BALASH, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,
discussed the fiscal notes. He stated that the stack began
with the Alaska Gasline Development Corporation (AGDC)'s
note.
Co-Chair Stoltze agreed.
Commissioner Balash noted that there were AGDC
representatives available via teleconference to speak to
the details of the note.
Co-Chair Stoltze relayed his intent to adjourn the meeting
and resume the conversation in the subsequent meeting. [See
minutes dated 4/18/14 5:19 pm.]
CSSB 138(FIN)am was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
5:19:36 PM
The meeting was adjourned at 5:19 p.m.
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